The liver disease poses a growing threat to many, but also an opportunity for pharmas and biotechs to fill a gaping
void

If you, like many people (including those of us here at DDNews) feel like the term
NASH came out of nowhere about a year or so ago, it’s probably not because you weren’t paying attention. I suspect only hepatology researchers
and physicians probably heard it with any regularity before then—NASH, by the way, standing for nonalcoholic steatohepatitis.

For example, in March 2014, research and consulting firm GlobalData put out a report titled “Nonalcoholic
Steatohepatitis (NASH) – Opportunity Analysis and Forecasts to 2017” that noted “The NASH market is currently deserted and awaits its first
NASH-specific therapy. With novel mechanism of action awaiting approval such as: Genfit’s PPAR agonist, GFT505.” Given how eagerly GlobalData
usually doles out predictions of market sizes and compound annual growth rates for all kinds of niche health/life-sciences sectors going out a number of
years in the future, their relative silence here means the market must have been deserted indeed.

However, it may
be that 2014 was a tipping point. The GlobalData report did note that Genfit’s PPAR agonist, GFT505, and Intercept Pharmaceuticals/Dainippon Sumitomo
Pharma’s farnesoid X receptor agonist, obeticholic acid, were both working toward approval and seeking to claim first-in-class honors. Also, later that
same year, in August 2014, Allied Market Research (AMR) released a report with the unwieldy title “Nonalcoholic Steatohepatitis (NASH) Market by
Therapeutics (GFT505, Obeticholic Acid (INT-747), Simtuzumab and Liraglutide (Victoza), Vitamin E, Pioglitazone, Placebo) – Global Opportunity Analysis
and Industry Forecast, 2013-2020.”

By that point in the year, AMR, at least, was ready to roll out some
predictions, saying that that NASH market was expected to reach $1.6 billion globally by 2020, registering a compound annual growth rate of 25.6 percent
during the period 2014-2020. The report also noted that the high prevalence of type 2 diabetes and obesity, both of which often lead to NASH and other
nonalcoholic fatty liver diseases (NAFLDs), would boost market growth.

More recently, P&S Market Research
released the report “Global Nonalcoholic Steatohepatitis (NASH) Therapeutics Market – Pipeline Analysis, Market Size, Share, Development, Growth
and Demand Forecast to 2022,” which noted that the global NASH therapeutics market is expected to witness significant growth due to current unmet
medical need of NASH, scarcity of the permanent treatment of the disease, increasing prevalence of obesity and high demand for safe and effective
medication.

As P&S commented, “The regulatory bodies are supporting the NASH market by providing
designations and funding for speeding up the drug development process. In March 2015, obeticholic acid, an investigational Phase 3 clinical trial drug
candidate of Intercept Pharmaceuticals Inc., received Breakthrough Therapy designation from the U.S. Food and Drug Administration for the treatment of
patients with NASH.”

The firm further added that the pipeline of NASH therapeutics is now “rich”
with more than 50 drugs, noting, “The pharmaceutical companies are actively involved in the research and development of drugs for NASH. In June 2016,
Zydus Cadila initiated Phase 3 clinical trials of saroglitazar to study its effect in adult NASH patients.”

However, P&S also acknowledged that while a large number of pharmaceutical companies are investing huge capital for the development of NASH
therapeutics—which would explain why we’re seeing such a spike in NASH news since 2016—certain factors such as unknown etiology, complex
pathophysiology and high treatment cost of NASH could hamper growth of the market during the forecast period.

Now that we’ve talked numbers and market forces a bit, here’s a roundup of some of the recent big news charging out of the once-desolate
and now increasingly crowded NASH frontier that we’ve covered here at DDNews just since September.

An immune approach to NASH

In fall 2016, BioLineRx Ltd. announced that it was kicking off
its first in-licensed project under the auspices of its strategic collaboration with Novartis, which is centered on the screening and development of novel
drug candidates. Specifically, BioLineRx had inked an exclusive worldwide agreement with Hadasit, the Technology Transfer Company of Hadassah Medical
Organization, to in-license BL-1210, a drug candidate for the treatment of liver fibrosis, especially NASH.

“After jointly screening and evaluating a wide range of preclinical and clinical therapeutic candidates, we are excited with the selection of
this potential treatment for nonalcoholic steatohepatitis to be developed as part of our multiyear partnership with Novartis, especially since there are no
approved treatments for this prevalent condition,” Dr. Kinneret Savitsky, CEO of BioLineRx, noted at the time of the announcement. “Upon
successful completion of the feasibility stage, we plan to advance the project at full steam. We also expect to bring additional promising projects to the
collaboration by the end of the year.”

BL-1210 is a preclinical project developed by Prof. Rifaat Safadi,
head of the Liver Unit in the Department of Medicine at Hadassah Medical Center in Jerusalem. The drug candidate offers a new approach of mitigating liver
fibrosis by modulating the immune system. As BioLineRx advances development of the project, the company will work on the novel drug target that can modulate
the immune system to reduce liver fibrogenesis and, by extension, liver scarring, which in turn could control disease progression.

“The unique approach of BL-1210 utilizes an existing antifibrotic propensity of the immune natural killer (NK) cells in
the liver. This antifibrotic function is attenuated in NASH patients, and BL-1210 is meant to restore and ameliorate NK cells activity and thus halt liver
fibrosis progression and NASH aggravation,” Serlin explained.

Reducing side effects of NASH
treatment

Around the same time came news that the FDA had completed its review of DeuteRx’s
investigational new drug application for DRX-065, the deuterium-stabilized (R)-enantiomer of pioglitazone, and determined that a Phase 1 clinical study in
healthy volunteers could be initiated. DeuteRx, an R&D-focused biotechnology company dedicated to improving racemic small-molecule marketed drugs and
drug candidates, had by that time presented preclinical results at the American Chemical Society National Meeting indicating that DRX-065 exhibited a
superior therapeutic index compared to pioglitazone for the treatment of NASH and also adrenomyeloneuropathy (AMN).

According to Dr. Sheila DeWitt, president and CEO of DeuteRx, “We have discovered and are developing stabilized enantiomers for several classes
of compounds by replacing the exchangeable hydrogen at the chiral center with deuterium.”

DeWitt explained
that DRX-065—an anti-inflammatory and a mitochondrial function modulator that reduces glucose—exhibits a superior therapeutic index compared to
pioglitazone for the treatment of NASH and AMN because it reduces side effects, including weight gain, edema and bone loss.

According to Dr. Scott Friedman, dean for therapeutic discovery and chief of the Division of Liver Diseases at Mount Sinai School of Medicine,
“The preclinical results with DRX-065 align with the benefits observed in several clinical trials of pioglitazone in NASH patients ... I believe that
there is great potential for DRX-065 to provide superior efficacy to pioglitazone without the undesired side effects for NASH patients.”

A hormonal tag-team approach

In late October, a research team
with an eye toward treating NASH and other conditions developed a “smart drug” that enters the liver by piggybacking off a common hormone
produced in the pancreas. The results were published in Cell in a paper titled “Chemical Hybridization of Glucagon and Thyroid Hormone
Optimizes Therapeutic Impact for Metabolic Disease.” The work was led by Prof. Matthias Tschöp, chair of Metabolic Diseases at the Technical
University of Munich and director of the Institute for Diabetes at Helmholtz Zentrum München; Richard diMarchi of Indiana University; and Timo
Müller of Helmholtz Zentrum München.

The two hormones featured in this work were T3 and glucagon. T3
(triiodothyronine) is one of the body's thyroid hormones that play significant parts in maintaining metabolism in the body. When the body's levels of
T3 are higher than usual, it can be a sign of liver disease or an overactive thyroid gland, as in the case of Graves' disease. According to Brian Finan,
the first author of this work, “While the ability of T3 to lower cholesterol is known for centuries, deleterious effects, in particular on the skeleton
and the cardiovascular system, do so far limit its medicinal utility.”

Glucagon is produced by alpha cells
in the islets of Langerhans in the pancreas and plays a role in helping the body regulate glucose levels and the use of glucose and fats.

“Part of our trick is that we use the pancreatic hormone glucagon as a vehicle to deliver thyroid hormone only into
cells carrying a glucagon receptor,” Christoffer Clemmensen, who led several of the experiments for this work, explained. “Since there are lots
of glucagon receptors in the liver, but almost none in heart or bone, our molecule concentrates thyroid hormone action to the liver while keeping it away
from places where it would be harmful.”

The combined glucagon/T3 molecule was found to deliver the T3
selectively to the liver, which led to better cholesterol metabolism in diet-induced obese mice in just a few days. The molecule also helped to decrease body
weight, correct NAFLD and improve glucose metabolism without any negative effects. When the team tested this approach in mice without the glucagon receptor
or without the thyroid hormone receptor in only the liver, no metabolic improvement was seen, which seems to imply that its signal specificity is unique to
the liver.

As noted in the paper's abstract, this approach was found to correct dyslipidemia, obesity and
hyperglycemia in diet-induced obesity mice, and to improve NASH and atherosclerosis in preclinical disease models.

The next part of this research, according to diMarchi, is “to see whether this drug candidate will reach the same level of targeted tissue-
selectivity in clinical studies.”

Pairing up against NASH cirrhosis and fibrosis

In December, Conatus Pharmaceuticals Inc. forged an exclusive option, collaboration and license agreement for the global
development and commercialization of its first-in-class, orally active pan-caspase inhibitor emricasan with Novartis. As part of the deal, Novartis agreed to
pay half of Conatus’ Phase 2b emricasan development costs after the option exercise, including the planned ENCORE-LF trial in decompensated NASH
cirrhosis, which, under the current development plan consistent with recent regulatory agency recommendations, will be conducted as Phase 2b rather than
Phase 2b/3. Phase 2b emricasan development costs also encompass the ongoing ENCORE-PH trial in primarily compensated NASH cirrhosis, POLT-HCV-SVR trial in
post-transplant HCV fibrosis and cirrhosis and ENCORE-NF trial in NASH fibrosis. Novartis will assume full responsibility for emricasan’s Phase 3
development and all combination product development.

“We believe Novartis is ideally suited to collaborate
with Conatus in the further development of emricasan for chronic liver diseases,” said Dr. Steven J. Mento, Conatus’ co-founder, president and
CEO. “This collaboration validates the Conatus emphasis on the initial development of emricasan as a single-agent treatment for NASH cirrhosis in both
compensated and decompensated patients, and sets the stage for simultaneous development of oral combination therapies for the treatment of NASH fibrosis,
including emricasan and one of the Novartis internal FXR (farnesoid X receptor) agonists in clinical development.”

“For Conatus, the near-term infusion of capital and Phase 2b cost-sharing allows us to fund ongoing operations through 2019. In
addition, with the Novartis commitment to fund Phase 3 single-agent emricasan development and all combination development activities, the resources are in
place to complete emricasan development both as a single agent for NASH cirrhosis and as a single agent or part of a combination therapy for NASH
fibrosis,” added Mento.

An “unusual” antibody to target NASH and other
diseases

Around the beginning of 2017 came news that Bird Rock Bio Inc., a clinical-stage
biopharmaceutical company, had received approval to start a two-part Phase 1 clinical trial for namacizumab, a therapeutic antibody to the cannabinoid 1
(CB1) receptor. The company has also entered into an agreement with GE Healthcare for process development, formulation and manufacture of namacizumab in
preparation for Phase 2 studies, as well as a collaboration and option agreement with Janssen Pharmaceuticals Inc. to fund the Phase 1 trial, process
development and Phase 2 preparation.

Namacizumab, a negative allosteric modulating antibody (NAMA) that stabilizes
the CB1 receptor in an inactive conformation, is being developed to treat large unmet medical needs in fibrotic and metabolic disease, including NASH and
diabetic nephropathy.

Paul Grayson, CEO of Bird Rock Bio, expects that namacizumab, which he described as a
“very unusual antibody” will demonstrate safety, tolerability and biomarker efficacy data in the clinical trial to support differentiated
clinical potential in fibrotic and metabolic disease, including NASH. As a first-in-class and only-in-class NAMA that stabilizes the inactive conformation of
CB1, namacizumab has the potential to build on the significant mechanistic and clinical data on the modulation of CB1 in disease, according to
Grayson.

What is NASH?

NASH is a type of liver disease characterized by liver inflammation and fat accumulation, in the absence of significant alcohol consumption. It is the
more severe form of nonalcoholic fatty liver disease (NAFLD)—in fact, it one of the largest contributors to liver failure and the need for liver
transplant. Its far less severe cousin, simple fatty liver (also called nonalcoholic fatty liver, or NAFL), is a form of NAFLD that doesn’t involve
inflammation.

In NASH (nonalcoholic steatohepatitis), patients suffer inflammation and liver cell damage, in
addition to fat in the liver. Inflammation and liver cell damage can cause fibrosis, or scarring, of the liver. NASH may lead to cirrhosis or liver
cancer.

Experts estimate that about 20 percent of people with NAFLD have NASH. NAFLD in general is more common in
people who have certain conditions, including obesity and conditions that may be related to obesity, such as type 2 diabetes. NAFLD can affect people of any
age, including children; however, people are more likely to develop NAFLD as they age.

While NAFLD occurs in
people of all races and ethnicities, it is most common in those of Latin American descent, followed by non-Hispanic white people. NAFLD is less common in
African Americans. Asian Americans are more likely than people of other racial or ethnic groups to develop NAFLD when their weight is within the normal
range.

SOURCE: National Institute of Diabetes & Digestive & Kidney
Diseases

A quick tour of the recent NASH landscape

The most recent news about NASH to come to us here at DDNews arrived just before we started preparing layouts for
this issue, courtesy of Australian biopharmaceutical company Immuron Ltd.

The company, which is focused on oral
immunotherapies utilizing polyclonal antibody products to target immune-mediated diseases, announced that its IMM-124E Phase 2 clinical trial for the
treatment of nonalcoholic steatohepatitis had successfully reached its full recruitment milestone of 120 randomized patients. The multicenter, double-blind
randomized clinical study is designed to assess the safety and effectiveness of IMM-124E for the treatment of NASH. The effectiveness element is primarily
focused on evaluating the effect of IMM-124E on patients with NASH, compared to placebo, after six months of treatment.

This effectively concludes the recruitment process of the NASH Phase 2 clinical trial, although, due to strong enrollment demand, the existing 12
patients in screening will be allowed to proceed to randomization, pending their respective eligibility. As previously announced, the company expects to
report the top-line results of the clinical trial in the second half of 2017.

“IMM-124E has a unique
multifactorial mechanism of action that we believe possesses a unique combination of safety and efficacy attributes which have the potential to greatly
improve outcomes for NASH patients worldwide,” said Thomas Liquard, CEO of Immuron.

Added Dr. Dan Peres,
Immuron’s head of medical: “We are thrilled that Immuron's clinical team, in partnership with the investigators and site staff, have been
able to significantly improve the study’s recruitment rate over the past few months to now reach full recruitment.”

Following are some other quick bites of news that have come to us in the past several months regarding NASH but that
haven't been covered in the magazine or on the website yet:

NASH trial changes for
Intercept

We mentioned Intercept in the main article for this section, and in late February, Leerink Partners released an
investor’s note regarding the company, looking in part at its Phase 3 NASH clinical trial for obeticholic acid (OCA).

As Leerink analysts Joseph P. Schwartz and Brett Larson noted, “The REGENERATE study seeks to support OCA's accelerated approval based
on the interim histology data while providing liver-related outcomes data to demonstrate long-term clinical benefit in the very competitive race to be first
to market in NASH,” adding that earlier in February, Intercept implemented two important study protocol changes for REGENERATE “that should allow
it to complete enrollment on schedule while maintaining or improving odds of success. The net impact of these changes is that now only 750 patients are
needed for the key interim analysis (vs. 1400 patients previously) and measured improvement on either (vs. both previously) co-primary efficacy endpoints (at
least one stage of liver fibrosis improvement with no worsening of NASH, NASH resolution with no worsening of liver fibrosis) is required for the study to be
considered a success.”

Milestones achieved in NASH-CX clinical trial

Galectin Therapeutics Inc., which presents itself as the leading developer of therapeutics that target galectin proteins, announced in early February
that it has generated sufficient financing to cover currently planned expenditures through 2017 and it remains on track to present top-line data from its
NASH-CX Phase 2 clinical trial by early December 2017.

Additionally, the company has reached important clinical
milestones in its NASH-CX trial, a double-blind, placebo-controlled Phase 2b clinical trial which has enrolled 162 NASH cirrhosis patients into the treatment
phase. To date, 47 patients have completed all 52 weeks of infusions with the company’s lead compound, GR-MD-02, and 122 patients have completed 26
weeks of infusions. In the NASH-CX clinical trial, more than 3,000 infusions (or 75 percent of the maximum infusions in the trial) have been administered
with no drug-related serious adverse reactions. Only eight patients have discontinued participation in the clinical trial before their scheduled completion
dates, and none of the discontinuations were due to drug-related serious adverse events. Currently, the approximate 5 percent dropout rate is significantly
below the 25 percent included as part of the trial design.

“The NASH-CX trial is designed to assess
the efficacy of our lead compound, GR-MD-02, in patients with NASH cirrhosis. The trial is being conducted with a primary endpoint that the U.S. Food and
Drug Administration views may be a surrogate for outcomes for registration trials in this patient population,” said Dr. Peter Traber, president, CEO
and chief medical officer of Galectin. “As previously disclosed, the significant biological activity of GR-MD-02 in humans has been demonstrated
in patients with moderate to severe plaque psoriasis, a disease which occurs with increased frequency in patients with NASH.”

Nimbus gets $200M milestone payment from Gilead

Nimbus Therapeutics, a biotech that
integrates computational chemistry and other advanced technologies to design breakthrough medicines and transform drug development, announced late last year
that it had received a $200-million milestone payment from Gilead Sciences Inc. related to Gilead’s allosteric Acetyl-CoA Carboxylase (ACC) inhibitor
program with NDI-010976 (now GS-0976) previously acquired from Nimbus.

“We are thrilled at the rapid
progress that Gilead has made in developing the ACC program, which is currently in Phase 2 clinical trials for NASH,” said Dr. Don Nicholson, CEO of
Nimbus. “As the first prospectively in-silico-designed molecule to reach human clinical testing, NDI-010976 is an important validation of our
unique computational chemistry approach. We are applying this model to design medicines that have a meaningful impact on the mechanistically interrelated
areas of metabolic disease, oncology and immunology.”